B.C. BIYANI PROJECTS PVT. LTD., Bhusawal V. ACIT, Cir.-2, Jalgaon

ITA 1422/PUN/2007

• Counselvise Citation: 142224514 RSA 2007
• Duration Of Justice: 4 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 02-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA
• Section: 234B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI R.K.PANDA, ACCOUNTANT MEMBER. ITA.NO.1422/PN/2011 (ASSTT. YEAR : 2005-06) B.C.BIYANI PROJECTS PVT. LTD. BIYANI CHAMBERS, PROFESSOR COLONY, JAMNER ROAD, BHUSAWAL. .. APPELLANT VS. ACIT, CIRCLE-2, JALGAON. .. RESPONDENT APPELLANT BY : SHRI M.K.KULKARNI RESPONDENT BY : SHRI MUKESH VERMA DATE OF HEARING : 10.07.2012 DATE OF PRONOUNCEMENT : 26.07.2012 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) ON FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. C.I.T.(A) ERRED IN CONFIRMING THE ADDITION OF RS.9, 54,01,780/- AS MADE BY THE A.O. U/S.40(A)(IA) BY WAY OF DISALLO WANCE OF PAYMENT TO SUB-CONTRACTORS AS PER EFFECT GIVEN BY A N ORDER UNDER SECTION 154 DT. 14-10-2008. 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. C.I.T.(A) ERRED IN REJECTING THE GROUNDS CHALLENGIN G THE LEVY OF INTEREST U/S.234-B AND 234-D OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY FILED RETURN OF INCOME ON 31.05.2005. THE RETURN WAS TAKEN UP FOR S CRUTINY. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER INVOKED PROVISIONS OF SECTION 40(A)(IA) OF INCOME TAX ACT, 1961, FOR DEFAULT OF TDS REMITTANCE AND MADE ADDITION OF RS.10,93,95,645 /-. AGGRIEVED BY THIS ADDITION, ASSESSEE FILED AN APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY, WHO UPHELD THE ORDER OF THE ASSESSING OF FICER. SAME HAS BEEN OPPOSED BEFORE US. IN FACT, THE ASSESSING OFF ICER ON PERUSAL OF THE AUDIT REPORT IN FORM NO.3CD FILED ALONGWITH RET URN OF INCOME NOTICED THAT TAX DEDUCTED AT SOURCE FROM PAYMENT MA DE TO SUB- CONTRACTOR WAS CREDITED TO THE GOVERNMENT LATE, I.E ., BEYOND THE TIME PRESCRIBED UNDER INCOME TAX PROVISIONS. THE D ETAILS OF THE SAME ARE AS UNDER: SR NO. NAME OF THE PARTY PLACE TOTAL AMOUNT (RS.) T.D.S. (RS.) 1 METCON INDIA MUMBAI 2,54,94,950 2,83,091 2 SAIL CONSTRUCTION CHANDRAPUR 4,49,02,598 5,02,909 3 N.JANGA REDDY KURNOOL 16,83,217 18,515 4 A.V.R. CONSTRUCTION 1,30,27,336 1,43,300 5 P.SHANKAR REDDY 3,43,711 3,781 6 T.BHANUPRAKASH REDDY 3,22,07,090 3,54,277 7 AADIN PROJECT P. LTD. 69,57,784 76,536 8 K.R. VIJAY BHASKAR REDDY 2,98,599 3,285 9 K.T.R. AND CO. 56,21,143 61,832 10 SIGMA CONSTRUCTION 10,38,779 11,427 11 PRADEEP 23,13,140 25,443 3 EARTHMOVER 12 KOMALDAS SANKDI 10,02,248 11,025 TOTAL 13,48,90,595 14,95,418 LESS: AMOUNT PAID TO METCON INDIA LTD., MUMBAI T.D.S. 31.03.2005 2,54,94,950 2,83,091 10,93,95,645 12,12,327 3. BEFORE US, THE ONLY SHORT POINT RAISED BY THE AS SESSEE IS TO THE EFFECT THAT THE DISALLOWANCE IS NOT MERITED, BECAUS E PROVISIONS OF SECTION 40(A)(IA) OF THE ACT DOES NOT COVER SITUATI ONS WHERE THE EXPENDITURE HAS BEEN ACTUALLY PAID DURING THE YEAR ITSELF AND THAT SECTION 40(A)(IA) IS APPLICABLE ONLY TO THE AMOUNT OF EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH OF EVERY YEAR. IN SUPPORT OF SUCH PROPOSITION, RELIANCE HAS BEEN PLACED ON THE DECISI ON OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG & TRANSPORTS V. ADDL. CIT 70 DTR (VISAKHA) (SB)(TRIB) 81. IN THE PRESENT CASE, IT IS SOUGHT TO BE POINTED OUT THAT THE ENTIRE EXPENDI TURE IN QUESTION HAS BEEN ACTUALLY PAID OUT AND THEREFORE, EVEN IF T HERE WAS A DEFAULT IN DEDUCTION OF TAX AT SOURCE UNDER SECTION 194C, D ISALLOWANCE UNDER SECTION 40(A)(IA) CANNOT BE MADE HAVING REGAR D TO THE RATIO OF THE JUDGMENT OF THE SPECIAL BENCH IN THE CASE OF ME RILYN SHIPPING & TRANSPORTS (SUPRA). 4. ON THE CONTRARY, THE LEARNED DEPARTMENTAL REPRES ENTATIVE HAS NOT DISPUTED THE FACTUAL MATRIX THAT THE PROPOSITIO N SOUGHT TO BE CANVASSED BY THE ASSESSEE IS SUPPORTED BY THE DECIS ION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILY N SHIPPING & 4 TRANSPORTS, SO, HOWEVER, HE HAS RELIED UPON THE ORD ERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE CASE OF THE REV ENUE. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. WE FIND THAT THE PROPOSITION CANVASSED BY THE ASSESSEE WAS A SUBJECT- MATTER OF CONSIDERATION BY THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA) AND RELEVANT PORTION OF THE HEAD NOTES AS REPORTED IN 70 DTR(VISAKHA)(SB) (TRIB) 81 READS AS UNDER: THE LEGISLATURE BY CONSCIOUSLY REPLACING THE WORDS FROM CREDITED OR PAID TO PAYABLE, THE INTENT HAS B EEN MADE CLEAR THAT ONLY THE OUTSTANDING AMOUNT OR THE PROVI SION FOR EXPENSES WHICH ARE LIABLE FOR TDS ARE TO BE DISALLO WED IN THE EVENT THERE IS DEFAULT IN NOT FOLLOWING THE TDS PRO VISIONS UNDER CHAPTER XVII-B. NO DOUBT THE OBJECT OF S. 40( A)(IA) IS TO ENSURE THAT THE TDS PROVISION AS PROVIDED IN CHAPTE R XVII-B IS IMPLEMENTED WITHOUT ANY DEFAULT. THE SUB-SECTION SPEAKS OF THE AMOUNT PAYABLE ON WHICH THE TAX IS NOT DEDUCT ED AND THEREFORE IT SHOULD APPLY ONLY IF ANY AMOUNT IS PA YABLE, BUT IF THE AMOUNT IS ALREADY PAID THE PROVISIONS OF THIS S ECTION SHOULD NOT APPLY. THE CRUCIAL WORD IS PAYABLE. IF ONE LOOKS INTO THE TDS PROVISIONS FROM SS. 194A TO 194K, IT W ILL BE APPARENT THAT AS PER THE LANGUAGE OF THOSE SECTIONS , TAX IS TO BE DEDUCTED AT THE TIME THE AMOUNT IS PAID OR AT TH E TIME WHEN THE MOUNT IS CREDITED, I.E. WHEN THE LIABILITY IS ADMITTED AND IT BECOMES PAYABLE. THEREFORE, WHEREVER THE PAY MENT IS COVERED BY AFORESAID SECTIONS WHETHER PAID OR CREDI TED, TAX HAS TO BE DEDUCTED. SECTIONS 194L AND 194LA MAY ALSO BE LOOKED INTO WHICH SAY THAT TAX HAS TO BE DEDUCTED ONLY AT THE TIME OF PAYMENT. THE LANGUAGE IN THESE SECTIONS THEREFORE S HOWS THAT THE LEGISLATURE HAS USED DIFFERENT LANGUAGE IN DIFF ERENT SECTIONS. IT IS TRITE LAW THAT EACH AND EVERY WORD OF THE SECTION HAS ITS OWN MEANING AND WHILE DRAFTING S. 40(A)(IA) THE LEGISLATURE WAS CONSCIOUS OF THE FACT THAT THERE MA Y BE A CASE WHERE THE AMOUNT IS PAID AND THERE MAY BE A CASE WH ERE THE AMOUNT IS PAYABLE AND HAS USED APPROPRIATE WORDS SO THAT THE LANGUAGE MAYBE CLEAR AND CLEAR MEANING MAY BE GIVEN . ONE MAY LOOK INTO THE LANGUAGE CONTAINED IN FINANCE BIL L, 2004 WHEREIN THIS PROVISION WAS INTRODUCED. IN THE FINAN CE BILL BOTH THE WORDS PAID AND PAYABLE WERE USED. HOWEVER THE WORD PAID WAS SUBSEQUENTLY DROPPED WHICH SHOWS THAT S. 4 0(A)(IA) 5 WAS MEANT TO BE APPLICABLE ONLY IF THE AMOUNT COVER ED THEREIN WAS PAYABLE AT THE END OF THE YEAR. REFERENCE MAY BE MADE FOR THE SCOPE AND EFFECT OF S. 40(A)(IA) AS CLARIFI ED BY CBDT IN CIRCULAR NO 5 OF 2005, DT 15 TH JULY, 2005 TO SHOW THAT THE INTENTION TO INTRODUCE THIS PROVISION WAS BROUGHT T O CURB BOGUS PAYMENTS BY CREATING BOGUS LIABILITY. CIT V . UPNISHAD INVESTMENT (P)LTD & ORS (2002) 177 CTR (GUJ) 176: ( 2003) 260 ITR 532 (GUJ) APPLIED. THE AFORESAID DECISION OF THE TRIBUNAL SUPPORTS THE PROPOSITION CANVASSED BY THE ASSESSEE TO THE EFFECT THAT WHERE AN AMOUNT IS ALREADY PAID DURING THE YEAR ITSELF, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT DO NOT APPLY AND THAT THE SAME IS APPLIC ABLE ONLY IN RESPECT OF THE AMOUNTS OUTSTANDING OR REMAINING PAY ABLE AT THE END OF EVERY YEAR, I.E. 31 ST OF MARCH. IN THIS VIEW OF THE MATTER, WE THEREFORE HOLD THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT ACCEPTING THE PROPOSITION OF THE ASSESSEE TH AT SECTION 40(A)(IA) OF THE ACT CAN BE INVOKED TO MAKE A DISAL LOWANCE ONLY IN CASES WHERE THE AMOUNTS ARE OUTSTANDING OR REMAININ G PAYABLE AT THE END OF THE YEAR, I.E. 31 ST MARCH. IN THIS VIEW OF THE MATTER, WE THEREFORE HAVE TO EXAMINE THE APPLICABILITY OF SUCH PROPOSITION TO THE FACTS OF THE PRESENT CASE. SINCE THE SAME INVOL VES A FACTUAL APPRECIATION, WE, THEREFORE, DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WH O SHALL EXAMINE THE MATTER IN THE LIGHT OF THE DECISION OF THE SPEC IAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPOR TS (SUPRA). THE ASSESSEE SHALL SATISFY THE ASSESSING OFFICER THAT T HE AMOUNTS IN QUESTION HAVE ALREADY BEEN PAID DURING THE YEAR ITS ELF AND ARE NOT REMAINING OUTSTANDING AS ON 31ST MARCH SO AS TO ESC APE FROM THE RIGORS OF SECTION 40(A)(IA) OF THE ACT. ON BEING SA TISFIED, THE 6 ASSESSING OFFICER SHALL DELETE THE ADDITION AND IF THE ASSESSING OFFICER ARRIVES TO A CONTRARY FINDING, HE SHALL BE AT LIBERTY TO PASS AN APPROPRIATE ORDER IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION, IN CARRYING OUT THE AFORESAID EXERCISE, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEAR D AND THEREAFTER PASS AN ORDER AFRESH AS PER LAW. 6. THE OTHER GROUND RELATING TO LEVY OF INTEREST UN DER SECTION 234B AND 234D BEING CONSEQUENTIAL IN NATURE, NO ADJ UDICATION IS CALLED FOR. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF JULY, 2012. SD/- SD/- ( R.K.PANDA ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED THE 26 TH JULY, 2012 GSPS COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ACIT, CIRCLE-2, JALGAON. 3. THE CIT(A)-II, NASHIK. 4. THE CIT CONCERNED. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER SR.PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.